The Business of Medicine

Health care is big business. Recent figures put health care spending at about 15 percent of the gross domestic product. Along with this growth come problems that must be confronted soon: How will we care for an aging population if there is a shortage of medical professionals? How can we reconcile the demand for the best medical care with the need to keep costs down? As clinicians and managers unite to discover ways to provide better care at a lower cost, medical professionals are returning to school for business education that will help them find new solutions to contemporary health care problems.

Back to SchoolDr. Phil Kibort ’98 M.B.A. is vice president of medical affairs and chief medical officer of Children’s Hospitals and Clinics. He explains that more and more doctors are pursuing business education because today’s health care environment demands it. “Over time, hospitals and health plans have realized they need physicians to participate in operations, but physicians need the skills to fit in and to understand the language of management. This is why there is a rising percentage of M.B.A.s and M.H.A.s. Both sides – management and clinical – felt that physicians needed the skill set.”

Dr. Laura Nelson ’01 M.B.A., director of the Marshfield Clinic North Division in Wisconsin, found herself in leadership roles without the business education she needed. “I was department chair of medicine at the Lakeland Center and V.P. of medical staff at the hospital. I had a knowledge deficit in areas such as health care law, medical finance and medical management. I had a connection with Fritz Wenzel, who used to be CEO of the Marshfield Clinic, and I also heard from physicians who had been through the MBA in Medical Group Management program. They recommended the program to me. St. Thomas honed in on what I needed and was flexible.”

Dr. Subbarao (“Subi”) Inampudi is past president of the medical staff at Abbott Northwestern Hospital and president of Consulting Radiologists Ltd., a professional group of 64 radiologists. He attended St. Thomas’ Physician Leadership College to gain an understanding of business. The results were beyond his expectations. “I wanted to get a background on finance, accounting, health care economics … what I called ‘hard stuff’; however, even though I learned accounting and finance, I didn’t retain that. What I really retained is how to interact with people, how to listen rather than talk, how to conduct a meeting effectively, how to get a consensus.” While the most transforming part of the program was not what he expected, he has learned business nomenclature and is able to relate to managerial concerns: “As a practicing physician, I can add value at the table with my administrative counterparts in delivering better health care in a cost effective manner. To me, that’s the bottom line.”

Physicians and Management as PartnersRic Magnuson ’00 M.B.A., chief financial officer at Abbott Northwestern, works closely with Inampudi. After graduation, he returned to St. Thomas to help teach what he learned. He is an instructor in the Physician Leadership College and, under the guidance of the university, has created custom finance modules to educate physician leaders. To Magnuson, it is not only important that physicians learn the language of business, but also that managers learn about the clinical side of medicine. “I need to understand enough so that when Subi’s talking, I can understand what he’s saying.”

Abbott Northwestern established a clinical council in order to harness the potential of a partnership between management and physicians. Inampudi chairs the council, and Magnuson is also a member. Inampudi divides time into pre- and post-clinical council eras. “Before it was formed, all decisions were made by the administration and forced on clinicians. Now a group of physician leaders bring their knowledge to the table from 6:30 to 8 a.m. Thursday, and the entire management team is present. They discuss patient care, quality, resource allocation, etc. It’s a partnership. Even after input, administration makes decisions; you can’t run a hospital by committee. The council is advisory in nature, not binding.” Magnuson notes that the clinical council is the way that Abbott Northwestern needs to do business going forward.

Time and time again, medical professionals who have blended business and medicine have made it clear that management and physicians need each other. Nelson puts it this way, “Our core business is taking care of patients. We need to understand all the steps involved in patient care when making a budget. It is harder to do this if you don’t have clinical knowledge. You need to know why things are important. We have dynamite information systems and electronic records at Marshfield Clinic, but we need input to make this sort of thing useful to the end user. On the other hand, business helps medicine by bringing reality. We only have a limited number of resources. Business gives tools to use resources and turn a positive bottom line. Physicians tend to like equipment. Business can say, ‘This may not be a good idea.’”

Kibort notes that each discipline can blossom when it discovers wisdom that is taken for granted by the other discipline. “Physicians are learning to work with teams, processes, not just autonomously, not one patient at a time. Management gets excited about systems thinking, but doctors have known this biologically for some time. There are similarities between the body and organizational systems. Both sides are learning from each other.”

Kibort believes that his business education has transformed the way he responds to patients. “When I work in the ER, the fact is that I’m much more acutely aware of the service component of value that a family sees. A doctor usually doesn’t ask, ‘Am I responding to their needs?’

“Of course,” Kibort laughs, “maybe I’m nicer because I only see patients a few times a year!”

Kibort has chosen to spend almost 100 percent of his time in a management role. “I affect more children in a managerial role, instead of on a patient-by-patient basis. I still love being a doctor, and my position still fits my personal values. I have an impact on the health of kids, just like a teacher has an impact on education.”

Like Kirbort, many physicians with business skills are often forced to make decisions on how their efforts can be most helpful to patients. Nelson practices about 20 percent of the time, while Inampudi practices 50 hours out of a 70-hour workweek.

Dr. Kenneth L. Irons, operations medical director for community clinics, St. Mary’s / Duluth Clinic Health System, and another certificate holder from the Physician Leadership College, works half time as a family physician. He believes that it is important to continue to practice so that he maintains credibility with the physicians he leads.

The Power of a Business EducationJust as Inampudi discovered that the part of the Physician Leadership College that really transformed him was not the “hard stuff,” but an improved ability to interact with people, other physicians noted that their business education went far beyond understanding business language and concerns. Says Irons, “The biggest part of the program wasn’t so much business as it was the leadership part. You don’t just go in and tell physicians what to do. They have to feel a part of it. If you order physicians around, you don’t get nearly the buy-in. I gained lots of leadership skills.”

“Doctors don’t learn things like communications with memos and meetings or understanding how people communicate in medical school. The Executive MBA program even had a course on values. In one class, we discussed how you would improve a part of your job. It really helped me with ambulatory care, for which I was responsible at the time,” Kibort states.

“My educational background has been totally different from what I learned in the 18 months at St. Thomas,” Inampudi said. “This was the first time I have ever been in a cohort-learning environment. In medical school you read, people teach, you learn by observing the patient, and you have a treatment plan and just move on. Also being a team player as physician is different from being a team player as a physician around the table with business people. Usually I’m the team leader in a team when I’m taking care of a patient. Automatically everyone listens to you, and it is carried on without asking any questions; however, if you are a team leader around a business aspect around the table, just because you’re the team leader does not mean you’re getting your way all the time. In fact, if you are getting your way all the time, that means you’re not getting great advice around the table.”

Confronting Health Care ChallengesAs management learns how to include physicians and physicians learn how to think like businesspeople, their partnership will better prepare the health care industry for the challenges it faces. According to Nelson, “The greatest challenge to health care is providing for the current level of health care at less cost. We have fewer trained medical professionals, more medicine, higher wages, more technology, but we need to spend less. We need to change workflow and adopt new ways of doing things. Consumers want the latest, but payers want to spend less. At an organizational level, it is important to try to get everyone to understand the seriousness of this. Individuals can come up with ideas, but we all need to move in the same direction.”

Magnuson concurs: “I think the way the system works today, there’s a disconnect between the person who receives the service and person who makes the payment. That’s what contributes to the challenge of ‘wants’ continuing to grow. Along with that, technological changes are driving costs to where something is going to happen at some point. We need to make decisions.”

“Hopefully,we can become much better at the quality side and improving health care,” Magnuson adds. “There’s a lot of waste in the system today. I think as we continue to look at the baby boomers and what their wants are going to be, it’s going to continue to strain the system. Also, do we have supply of clinicians moving forward? There are more and more needs in the clinical environment, and the supply of people going into the field is probably not going to keep up with demand. That’s going to cause a challenge to the system as we go forward.”

Fortunately, as more and more physicians are actively involved in management, there is a growing understanding of and commitment to the need to address these problems. Perhaps the union of physicians and managers will enable us to face these problems and win.

The people interviewed in these articles received their business education from three St. Thomas programs.

Executive MBAThe Executive MBA is an accelerated M.B.A. degree program for working managers and leaders with significant managerial accountability and responsibility. The 14-course curriculum emphasizes the strategic and conceptual managerial competencies that cross industries, organizations and functions.

MBA in Medical Group ManagementThe MBA in Medical Group Management program prepares physicians and administrators from many different areas of health care to be effective managers and leaders within health care. The 27-month program has one on-campus session every six months, allowing the students to conduct coursework while continuing full-time employment. In its 11th year, the program is accredited by ACEHSA.

Physician Leadership CollegeThe Physician Leadership College develops a community of physician leaders capable of directing current and future health care organizations to maximize their success. This 18-month certificate program is a collaborative effort of the University of St. Thomas and the Minnesota Medical Association.